NDB’s Rs.8bn debenture issue snapped up on opening day

National Development Bank PLC’s debenture issue to raise Rs. 8.0 billion via Basel III compliant listed, rated, unsecured, subordinated and redeemable debentures oversubscribed within hours from opening the issue, yesterday.

This oversubscription came on the back of NDB successfully raising Rs.9.5 billion in Tier I equity via a rights issue and private placement and securing US$ 75 million in the form of a credit line funding from the Development Finance Corporation of the USA earlier this year. 

Commenting on the debenture issue, NDB’s Director/ Group Chief Executive Officer, Dimantha Seneviratne thanked investors for partnering NDB in their mutual growth journeys. 

“As a responsible financier, we always strive to generate maximum value to all our stakeholders and this instance will not be different. We will channel the funds raised to a host of business segments, including SMEs which we hope will provide them the necessary impetus in the recovery from effects of the pandemic” he further noted. 

The debentures were issued with the objectives of improving and further strengthening the capital adequacy ratios (CAR) in line with the Basel III guidelines and facilitating future expansion of business activities of the bank. 

The issue was structured in two types of debentures, Types A and B, with tenors of 5 and 7 years, nominal interest rates of 11.90 percent p.a. and 12.00 percent p.a. payable semi-annually, yielding AERs of 12.25 percent and 12.36 percent respectively. 

The initial issue comprised 60 million debentures at a par value of Rs.100 to raise Rs.6.0 billion with the option of raising further Rs.2.0 billion, in the event of an oversubscription.  
The debentures issued carry a non-viability conversion clause as per Basel III guidelines. 

The bank also obtained formal approval from Central Bank of Sri Lanka towards including the debenture proceeds under Tier II capital of the bank. 

The debentures were rated at A- (lka) by Fitch Ratings Lanka Limited.

NDB Investment Bank Limited, NDB’s subsidiary arm engaged in full-spectrum of investment banking services acted as the sole manager and the placement agent to the issue.